I don't think Radical Larry's pocket dimension seems like enough of a nightmare. We should revise the mossy-stone look, make the ambiance, music more creepy, etc. The place should mess with the player a bit more. shouldn't straight-up hunt down the player, he should have a little fun when he locates the player, bite their Achilles tendon and cause bleeding. The closer gets, he could distort the place a bit more.
If the player stays in the Pocket Dimension for too long, should pop up & kill the player with some rather gruesome sounds.